RESPONDENT: North Carolina
LOCATION: Shell Oil Products
DOCKET NO.: 132 ORIG
DECIDED BY: Roberts Court (2009-2010)
CITATION: 560 US 330 (2010)
GRANTED: Jun 16, 2003
ARGUED: Jan 11, 2010
DECIDED: Jun 01, 2010
Carter G. Phillips - For the plaintiffs on exceptions to the report of the Special Master
Edwin S. Kneedler - Deputy Solicitor General, Department of Justice, for the United States as amicus curiae
Walter E. Dellinger, III - For the defendants on exceptions to the report of the Special Master
Facts of the case
Several states belonging to the Southeast Interstate Low-Level Radioactive Waste Management Compact ("Compact") and the commission created by the compact ("Commission") filed suit against North Carolina. The plaintiffs allege that North Carolina was designated as a host state for a waste management facility, accepted $80 million to build the facility, but then declined to fund, license, build, and operate it. The plaintiffs seek to recover the $80 million, a $10 million sanction, and attorneys' fees.
The Supreme Court assigned the case to a Special Master who conducted proceedings and filed two reports. The Preliminary Report recommended denying North Carolina's motion to dismiss on sovereign immunity grounds; denying plaintiffs' motion for summary judgment as to Count I which sought enforcement of sanctions against North Carolina; granting North Carolina's motion to dismiss Count I; and denying North Carolina's motion to dismiss Counts II-V. The Special Master's Second Report recommended denying Plaintiffs' motion for summary judgment and granting North Carolina's motion for summary judgment on Count II; and denying North Carolina's motion for summary judgment on Counts III-V. The parties then filed a total of nine exceptions to the Special Master's Reports.
1) Do sovereign immunity principles require the dismissal of the commission as a plaintiff in this original action brought jointly by the commission and four states against North Carolina?
2) Does the compact authorize the commission to impose monetary sanctions against North Carolina in response to North Carolina's alleged breach of its obligations?
Media for Alabama v. North CarolinaAudio Transcription for Oral Argument - January 11, 2010 in Alabama v. North Carolina
Audio Transcription for Opinion Announcement - June 01, 2010 in Alabama v. North Carolina
John G. Roberts, Jr.:
Justice Scalia has our opinion this morning in original action 132, Alabama against North Carolina.
This case is before us pursuant to our original jurisdiction over suits between the states.
In 1986, Congress granted its consent to the Southeast Interstate Low-Level Radioactive Waste Management Compact which originally had eight party states, including North Carolina.
The compact is administered by a Commission which was required among other things to “identify a host state for the development of a new regional facility for the disposal of low-level radioactive waste."
The Commission designated North Carolina as a host state, thereby obligating it to take, and this the language of the Compact, appropriate steps to ensure that an application for a license to construct and operate a low-level radioactive waste storage facility is filed with and issued by the appropriate authority.
In 1988, North Carolina asked the Commission for assistance with the substantial costs of licensing and building a facility.
The Commission adopted a resolution declaring it “appropriate and necessary” to provide financial assistance and ultimately paid almost $80 million to North Carolina from 1988 through 1997.
The Commission acquired that money from fees paid by generators of low-level radioactive waste at the expend disposal facility in Barnwell, South Carolina which the new facility was ultimately supposed to replace.
North Carolina also expended $34 million of its own funds, yet by the mid 1990s, North Carolina was still many years and many tens of millions of dollars away from obtaining a license and constructing a facility.
In 1997, the Commission notified North Carolina that absent a plan for funding the remaining steps of the licensing process, it would not provide any additional funds.
North Carolina responded that it could not continue without external funding.
After the parties fail to agree on a financing plan, in December 1997 the Commission ceased its financial assistance to North Carolina and North Carolina ceased taking steps towards obtaining a license.
In June 1999, Florida and Tennessee filed a complaint with the Commission seeking monetary sanctions against North Carolina and the next month, North Carolina withdrew from the Compact.
In December 1999, the Commission determined that North Carolina had failed to fulfill its obligation to take appropriate steps under the Compact and adopted a resolution demanding that the state repay the approximately $80 million and in addition pay other monetary penalties.
North Carolina did not comply.
In 2003, we granted the plaintiffs’ here, four states; Alabama, Florida, Tennessee and Virginia plus the Commission leave to file a bill of complaint against North Carolina under our original jurisdiction.
The complaint alleges claims of violation of the state's rights under the Compact count one, breach of contract count two, unjust enrichment count three, promissory estoppel count four and money hadn’t received count five, [Laughter] and requests money and other relief including a declaration that North Carolina is subject to sanctions and that the Commission's sanctions resolution is valid and enforceable.
We assigned the case to a Special Master who filed two reports, making recommendations with respect to each of the foregoing claims and with respect to North Carolina's motion to dismiss certain claims on grounds of sovereign immunity.
The parties fined nine exceptions to the Master’s reports.
For the reasons provided in our opinion, we overrule all of them.
We first conclude that the express terms of the Compact do not authorize the Commission to impose monetary sanctions against North Carolina and since that is so we reject it as moot the plaintiffs’ argument that North Carolina could not avoid monetary sanctions by withdrawing from the Compact and we deem plaintiffs’ argument that North Carolina forfeited its right to object to monetary sanctions abandoned but in any event without merit.
We also reject plaintiffs’ argument that we are bound by or should defer to the Commission's conclusion that North Carolina breached the Compact.
The terms of the Compact do not make the Commission the sole arbiter of disputes arising under it and hence we are not bound by the Commission's conclusion, nor do we apply deferential administrative law standards of review, but instead as the exclusive arbiter of controversies between the states, we exercise our own independent judgment as to both fact and law.
We further reject plaintiffs’ primary argument that North Carolina breached its obligation under Article 5(c) of the Compact to take appropriate steps towards obtaining a license.
The Compact requires North Carolina to take only those licensing steps that are appropriate.
The party’s course of performance establishes that it was not appropriate for North Carolina to proceed with a very expensive licensing process when it had become clear that it will receive no further financial assistance for that purpose, and when it appeared that even if the license were obtained there would be no funding for construction of the facility.
The Compact does not require North Carolina to cover all licensing and building costs on its own.
We reject plaintiffs’ argument that North Carolina breached an implied duty of good faith and fair dealing when it withdrew from the Compact in June 1999.
We have never held that an Interstate Compact includes such a duty and we decline to do so here.
The Compact by its terms imposes no limitation on South Carolina's right to exercise its statutory right under article 7(g) to withdraw.